|
CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC254-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE BUSINESS ENTERPRISE AND REGULATORY REFORM, DEFENCE, FOREIGN AFFAIRS AND INTERNATIONAL DEVELOPMENT CommitteeS
Thursday 17 January 2008 RT HON DES BROWNE MP, MR DESMOND BOWEN and MR TONY PAWSON Evidence heard in Public Questions 1 - 51
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Business Enterprise and Regulatory Reform, Defence, Foreign Affairs and International Development Committees on Thursday 17 January 2008 Members present Roger Berry, in the Chair Mr Adrian Bailey John Battle Mr David S Borrow Malcolm Bruce Mr David Crausby Linda Gilroy Mr Fabian Hamilton Robert Key Peter Luff Sir John Stanley ________________ Examination of Witnesses Witnesses: Rt Hon Des Browne MP, Secretary of State for Defence, Mr Desmond Bowen, Policy Director and Mr Tony Pawson, Head of Defence Export Services, Ministry of Defence (MoD), gave evidence. Q1 Chairman: Good afternoon. Secretary of State, welcome. It is the first time we have invited the MoD to give evidence to this Committee. In the past we have had evidence from the Foreign and Commonwealth Office, from DFID[1] and the Department for Business, Enterprise and Regulatory Reform (formerly DTI)[2] clearly because of their major roles in this field in terms of policy and export control matters. Obviously the MoD is also deeply involved in export control policy and therefore we are very grateful to have the opportunity to have yourself and your officials here with us this afternoon. Perhaps first of all, Secretary of State, may I invite you to introduce your officials for the record? Des Browne: Thank you very much; we are pleased to be here. The MoD does quite an important advisory role in relation to the export licensing process. On my left I have Desmond Bowen who is Policy Director from the MoD and on my right I have Tony Pawson who is the Head of Defence Export Services. Q2 Chairman: Secretary of State, the MoD seems to have two roles in the arms export control field. On the one hand the MoD has a promotional role in promoting UK defence exports, but at the same time it has a regulatory function in ensuring that licences are only granted for arms exports if they meet the criteria. How do you separate that promotional role from the regulatory function at the MoD? Des Browne: I do not want to start off with a semantic point but I carefully used the word "advisory" in the introduction. We do have an advisory role as part of the overall regulatory function but we do not hold the regulatory function in this process; we advise in relation to it. However, we do recognise that potential conflict and we take great care to ensure that the part that we play in the process of export licensing is separated from export promotion. Apart from anything else, in the Department the Minister for Defence Equipment and Support is responsible for export promotion issues and the Minister for the Armed Forces is responsible for the export control issues. The promotion staff are not in any way involved at all in the licensing process. The head of the service may wish to go into the detail of that for you but we take great care to ensure that the unit that gives input to DBERR[3] in relation to its decision making does not comprise anybody-there is no commonality at all-involved in supporting export internationally. Q3 Chairman: So the individuals concerned with the two functions are quite separate. Des Browne: They are. Perhaps Tony can explain in more detail so you know exactly how this works in practice. Mr Pawson: As well as the export promotion staff not being involved in the licensing process, those involved in the export licence process are not involved in the promotion. Secondly, it is a secretariat function which means involving all the relevant parts of the Ministry of Defence who do not report up the same chain of command. For example, from the equipment capability point of view, we need to protect our own UK capability when we are exporting something so there is a branch that looks at that. What about our technology issues? There is a branch that looks at that. What about protection of classified information? There is a branch that looks at that. What about security of our equipment if it is exported overseas? What sort of security arrangements have we got with the foreign governments of countries concerned so we have some reassurance on that? What about potential diversion? In terms of staff we have the DIS[4] which looks at these matters. What is the end use? What is the technical assessment of what this capability we are proposing to export will do for the operations of the armed forces of the country concerned? Will that change the regional balance? What about defence bilateral relations? That is another branch of the Ministry of Defence. The specialists: there is WMD,[5] there is Aldermaston, there is DSTL[6] in Porton Down for chemicals, there is the CESG[7] on cryptographic equipment. All these various branches are brought together and advice provided to ministers. Q4 Chairman: As I understand it there are particular criteria that you focus upon, obviously criterion 5 (national security), criterion 7 (consequence of diversion), there are particular criteria in the code. Does that mean that the MoD leaves other criteria to other departments? For example, criterion 2 (risk of use of arms for internal repression), do you leave that to the Foreign Office? Does the Foreign Office do internal repression or does the MoD do internal repression? Des Browne: I would not like to speak for the Foreign Office, but we certainly do not do it! It was helpful that Tony was as comprehensive as he was and he was probably more comprehensive than you might have wanted immediately, but I think he listed the range of particular skills and the knowledge base that we have in the MoD that informs one or other of these eight criteria. Clearly we have particular knowledge in relation to 4, 5 and 7 and people look to us because we have that knowledge base, particularly informed comment in relation to 4, 5 and 7 but also, given the substantial experience that our armed forces have across the world-particularly in the second part of the 20th century and the 21st century but even earlier than that-we have a knowledge base that gives us information about how particular pieces of equipment can be used, particularly about the usage and whether or not that usage would generate a contravention of any of the other criteria or enact and bring into play any of the other five criteria. Of course if we had a view we would make that known. On occasions I am sure-although I cannot think of a specific example because I do not do this at that level-that people may come and ask us if we have a suspicion or a concern that this piece of equipment is being used in a certain way and they want advice. Q5 Mr Borrow: Moving onto the Form 680 process obviously there is classified equipment which exporters wish to demonstrate or sell overseas. The process is that they will need clearance from the MoD; the Form 680 is filled in from the MoD and they deal with it before it goes to DBERR where the Export Control Organisation then deals with it. Is there a technical reason why the whole of that process could not be led by the Export Control Organisation in DBERR, why it needs to go through your Department because the existence of a Form 680 from your Department does not necessarily mean it then gets a licence to be exported? Des Browne: I think that is right, although in shorthand terms my understanding of the inference of the successful application of a Form 680 is that it has more relevance to the process going forward. If you are refused a Form 680 then you have a fairly clear idea that you are pretty unlikely to get an export licence so it forms a process in that way. It does of course have the advantage that at a very early stage in the process quite a lot of the considerations that apply to export licensing are applied and people, having gone over that course and distance, are in a much better position to apply for an export licence if the negotiations get there. The nub of your question really is whether this is a function of licensing which we have the regulatory role but where properly the regulatory role lies with DBERR. I think the answer to that lies in the historical basis of these two different processes. One is about licensing, permitting the actual export of equipment or controlled goods. The other is about allowing people to use what would be classified-not only classified, it extends beyond information which is classified-essentially getting permission to use what would be classified information, and subject to the Official Secrets Act, to get an assessment of the defence implications of doing that at an early stage in the negotiations. This is a defence related assessment of classified information which is subject to the Official Secrets Act. It becomes later a part of the process of export licensing but that is why we do it, because we have the knowledge base and we know the consequences of the sharing of this information, about the control of access by customer governments to information and equipment which is subject to security classification. It is just a common sense process I think which has grown up which allows people to share a level of knowledge that allows negotiations and discussions to take place about potential sales. Q6 Mr Borrow: Your view would be that we need to keep the process of deciding whether it is in the UK's interest for this bit of kit to be exported, in the sense that it is classified information in the hands of foreigners, separate from the consideration as to whether or not this bit of kit should be with country A who could use it in a bad way, which is essentially what the export control regime is all about. Des Browne: I think I am just explaining why I think this has grown up and I think the reason why it has grown up is that the Form 680 derives from the Official Secrets Act and not from the export control legislation. The reason we do it is because it is considered entirely appropriate and I agree with them, that we are the people who can ensure that we do not lead to the UK revealing more than we would wish to about our defence capabilities in the early stages of the negotiations of potential contracts. It does have the advantage, as I say, that people get a degree of comfort about that, being able to get through that process successfully, about the later stages of export licensing. Again that is encouraging and it is a kind of tester I think. Of course we do not apply all of the criteria to a Form 680; we have a particular consideration and that is about defence secrets.[8] Q7 Chairman: You say the situation has grown up historically, but would you have any objection to DBERR running the F680 process? Des Browne: We will continue-for example, when UKTI[9] take over the functions of DESO[10] with the new group that they have created-to inform the process of export licensing in the way in which we currently do. We will keep those people in the MoD; we will keep them separate from the people who transfer. We will keep that expertise so as far as criteria 4, 5 and 7 are concerned we are the repository of most of that and we will continue to do that. I will have to keep things under review, but I do not see us changing this process to such an extent that anybody would take the view that another department that did not have the support that we can give in the Ministry of Defence to the people who make this decision, the knowledge base-it is about the protection of classified information in relation to defence capability and its effect on our defence capability. With all due respect to DBERR I do not think they have the expertise to be able to make that decision. Mr Pawson: I would like to add the point that although, as the Secretary of State has said, there are negotiations that take place in the early stage of the promotion process in relation to the Form 680, it does not constitute a commitment to actually issuing a licence. The fact that this process is independent of the DBERR licensing process actually reinforces the independence and integrity of that decision and that process. Q8 Sir John Stanley: Secretary of State, as you are aware at the end of the war in the Lebanon in 2006 there was a 72-hour window between the passing of the United Nations Security Council resolution for a ceasefire and that ceasefire coming into effect. In that period the Israelis dropped a larger number of cluster munitions in that 72-hour period than has ever been recorded. You will also be well aware that that has resulted in a significant number of subsequent civilian deaths and maimings. The Committee, as you know, in its previous report very much welcomed the Government's decision to phase out dumb cluster munitions, but those of us who have been-I went with a group in the Foreign Affairs Committee to the Southern Lebanon-and have talked to the UN mine clearance personnel trying to remove these cluster munitions, have been very struck by the fact that not only do dumb cluster munitions have a significant failure rate (in other words do not detonate on impact) but we were surprised to discover that so-called smart cluster munitions also have a significant failure rate of up to approximately 10%. Given the fact that it is the Government's stated policy to stop the use of cluster munitions which in the Government's words "cause unacceptable harm to civilians", do you not agree that the Government should be seeking to phase out as soon as possible the use of smart cluster munitions as well? Des Browne: I made the decision in March of last year to phase out two of the four cluster munitions that we had, to discontinue their use and to destroy them; they are now destroyed.[11] We have taken the lead internationally in the context both of the CCW[12] and the Oslo negotiations. In the process of delivering that commitment we have destroyed those two munitions.[13] We still have two other munitions that are a cause of discussion. This whole process is bedevilled of course by a lack of clarity as to what is a cluster munition. There is no agreement internationally as to the definition of a cluster munition, never mind one that does unacceptable harm and parties are left to make their own view about that. In the absence of an international agreement on this which we strive for because we would like to see all cluster munitions phased out across the world, but I have responsibilities to balance military effectiveness and capability-including the very important imperative that I have to protect those forces whom I deploy into very difficult environments-with the humanitarian issues and concerns and I think it is important that people understand that I was able to make the decision that I made because the military advice, which I accepted, was that the purpose for which we had those munitions was able to be met in terms of military effectiveness and military protection-including force protection-by developments in other munitions. We strive to develop munitions which can replace those munitions that we have that some others define as dumb or smart cluster munitions; we make that differential ourselves because that has become a term of discussion. I think what I am saying is that I agree with you that we should have that ambition and I do have that ambition and our government does have that ambition, but subject to that very difficult balance between the military capability which we need for effectiveness, particularly for the protection of our forces, and these very obvious humanitarian considerations, some of which manifested themselves in Southern Lebanon in that 72-hour period. Can I also say that I am well aware of the work that the Norwegians did in that area and the conclusions they came to about the remnants of those weapons being used. We have ourselves, as I am sure you know because you have a great interest in this area, done some other work and the advice that I received from that work is that the weapon that we hold has a failure rate of 1%[14]. I know there is some dispute but that is part of the problem and that is part of why these processes-the CCW process and the Oslo process-are so important because I think we have to deal with these issues about definitions, about the evidential phase, about decisions that need to be made. The short answer to your question is yes because I think you asked me if I share that ambition and I do share that ambition. Q9 Sir John Stanley: I am very glad that you have highlighted what I personally believe is the key issue here which is the failure rate. Do you agree that the use of cluster bombs which have a significant failure rate is the equivalent of sowing anti-personnel landmines which the Government has, by treaty, now said that it would not use? The equivalent way of doing it is by sowing cluster bombs that do not detonate on impact. Could I ask you, Secretary of State, if it is the case that in the UK we have the failure rate of smart cluster munitions down to 1%-if that is the case-do you see any technological, near-term prospects of achieving what I am sure you want to see and others would wish to see as well, cluster munitions which actually do achieve the desired objective which is a 100% success rate in terms of detonation on impact and not be left lying around in the bushes, the fields and the hedges, around people's houses and gardens where they are a permanent risk to civilians? Des Browne: I share that ambition. Personally-although I believe I speak for the Government on this-I share the broader ambition of being able to do with anything that could be classed as a cluster munition what we were able to do with the two munitions that we have removed from our armoury and destroyed,[15] and that is replace them with weaponry which provides the capability that cluster munitions presently do but without them being of that design. Q10 Linda Gilroy: I think most people would find it difficult to understand what you mean when you say that they are needed for force protection. Can you say something to the Committee about that? Also, can you give some sort of idea of what the position is as regards other countries using such munitions, dumb and otherwise? Des Browne: Can I just say first of all that we do not deploy these munitions into any theatre of operations that we are presently engaged in. We neither deploy them in Iraq nor Afghanistan. They are not, in our view, appropriate or necessary for either of those two operational environments.[16] However, they are appropriate in certain circumstances when you seek to take out either a number of armoured vehicles or alternatively a dispersed force in a particular area. So they are an area weapon and presently they are part of our capability should we be faced with that sort of challenge either to win the battle-which is what we would seek to do in war-or alternatively to protect our forces from that threat. The alternative, if we took them out, would be that we would have to bomb quite extensively the area and that risks a significant degree of collateral or civilian damage if we were to deploy a large amount of force over a large area in order to achieve the same objective. The bottom line is that I take very seriously-as do the military in the United Kingdom-and all previous governments have our obligation only to have and use weapons that conform with international humanitarian law. Weapons require not to be indiscriminate, careless or negligent; to the extent that they are then we have to be able to make the balance and all of this is a balance. I have tried to articulate that balance and by our actions and decisions shown how we can affect it. Q11 Robert Key: I believe I know where the Secretary of State's heart lies and I wish to encourage him. I think he would agree that no manufacturer of any arms can guarantee that it will be 100% accurate or successful at any one time. I think he would agree that even within the military there is controversy about the effectiveness and the appropriateness of using these weapons. However, I would say that in our democracy where politicians tell the military what to do, the time has come to tell the military to find an alternative to these weapons. Would you agree, Secretary of State, by saying what the Ministry of Defence says in your response to our report that cluster munitions include those that cause unacceptable harm to civilians, implies that you are prepared to accept acceptable harm to civilians? What is "acceptable harm"? How many children out of every 10 is it acceptable to kill? Forgive me, Chairman, getting emotional; I should declare my interest here. On 13 May 1955 I was on Swanage Beach playing with my friends and a British World War II anti-personnel mine exploded; five out of the seven of us were killed, two of us survived. Was that acceptable? If six out of seven had been killed and I had a 50% chance of survival, would that have been acceptable? It would not have been to me, and that is one reason why I am on this Committee incidentally. I really do think that the time has come to realise that people in this country will accept our military and support our military but there does come a point when they say-and they have the right to say-"We do not think that form of munition is acceptable". Des Browne: I fully respect and have engaged with those who very strongly hold that view and I enormously-having now heard this part of your life which I was not aware of, Mr Key-respect your views in this regard; you are informed by an experience that none of the rest of us have had. This Committee's evidence should not be left with the impression that the military are not seeking alternatives to these weapons. That is the state of mind of our military and that is the state of mind of our ministers. We are seeking alternatives to those weapons. There is an unhelpful vocabulary in relation to these weapons in terms of definition, in terms of phraseology, which is difficult to define unless you define it by reference-as I do-to international humanitarian law. I am very conscious of my responsibility in this regard. I can only reiterate that I have in government taken certain steps; I have an ambition to be able to take other steps. There will of course continue to be a debate in the military and this is a very healthy position; the use of vehicles, the use of all sorts of weaponry, about tactics, about concepts. The debate goes on. There is a settled view in the military in relation to the need for this capability presently. My view is that I need to keep it in our armoury presently for the eventuality that I may have to deploy forces into certain circumstances; presently we are not doing that. Q12 John Battle: If I could switch the focus to the arms fairs and in particular the presence of China at arms fairs because since Tiananmen Square back in 1989 there has been an EU embargo that we are signed up to yet there have been reports-I think in 2005 and 2007-that China was actually present at arms fairs, at the DSEi[17] arms fair in London. This Committee published a report in 2006 expressing its dismay to learn about the Chinese military delegation visiting the arms fair; there has been another visit since. The response of the Government to that report was to reaffirm that the embargo should stay in place. Does the Chinese presence at an arms fair undermine the embargo and our commitment to the current embargo? Des Browne: I do not think it does. I was very aware in my preparation for this hearing and I know this is an issue that was raised with my predecessor not in an evidence session but in correspondence. He gave, I thought, a clear explanation as to why it was appropriate in the circumstances to invite China. All invitations, of course, to these exhibitions are made in the context that people know that it does not mean that the goods on display are being promoted with a licence for export to them. There is still the export licensing process; if they are controlled goods they will need to go through the export licensing process. The Chinese knew, when they were coming, that that was the case. The second point I make is that the EU embargo is not a complete embargo; it is partial in scope. There was equipment on display which British companies could easily have sold appropriately to the Chinese which did not come within the scope of the arms embargo. The final point I want to make to you is that we took the view and still take the view that engagement with the Chinese in this regard is important despite the fact that there is an arms embargo and if we can sustain the embargo and have engagement with them then that is appropriate. At the time and since then we have been encouraging the Chinese to play a part in peacekeeping operations and they are now playing a part in peacekeeping operations across the world. I believe they have troops in the Lebanon making a very important contribution. I return in a sense to the question: is the suggestion that these troops should not be armed because of the embargo? I do no think anybody believes it is. Q13 John Battle: I would broaden out the question and say, could you then tell me what factors in a broader sense-China or other countries-determine whether the MoD sponsors a delegation, not just that they are allowed to come but we sponsor the delegation? Is it the size of their market? Are the abuses of human rights taken into account in determining whether the Government should sponsor their presence at an arms fair? That is the question I would really like answering. Des Browne: Of course they are. Like all of our relationships with China (indeed, as I speak, I think the Prime Minister may well still be sitting on the tarmac at Heathrow Airport trying to take off to fly to Beijing) I do not think anybody seriously believes that we should not have relationships. If we can have a relationship in this area-bilateral defence discussions, discussions in relation to human rights issues among others, encouragement for the Chinese Government to play a part for example in peace keeping operations-and offer the opportunity in the context of what we believe is a perfectly appropriate environment to buy the sort of support equipment they might need to do that, as long as it is not in contravention of the arms embargo, then that is an entirely appropriate thing to do. Q14 John Battle: That is the question. I was the Foreign Minister in 2001 when the Chinese Premier came to Britain; we stopped them participating in the arms fair in 2000 and 2001 on human rights grounds and we still kept a conversation open with them. I visited China myself as a minister and so did the Foreign Secretary at the time and I think I am just pressing to find out about the criteria. At what stages do you rule that progress on human rights has not been sufficient to sponsor any country-not just China-to be present at the arms fair? Do you think sufficient progress has been made? Des Browne: Since I did not come armed with criteria and I do not want to answer this off the top of my head. I will give this some reflection and write to the Committee in more detail in response to this because it is a legitimate question. To answer generally, we have a significant interest to ensure that the Beijing Olympics, for example, are safe because we will have a lot of our citizens not just competing but also being present at Beijing when those Olympics are taking place. It would not be in our national interests in my view and in the interests of our citizens to deny the security forces of China the wherewithal to ensure that that was the case. It would be against our national interests. Circumstances change and I think that is indicative of the sort of factor that might apply in the balance and you just have to look at them on a case-by-case basis. Without wishing to reduce this to simplicity-in fact complicating it-I would say that you also have to look at it year on year. Circumstances change and progress in terms of human rights will be a factor but it will not be the decisive factor if there are other considerations such as, for example, the likelihood that we would need to make a contribution to helping the Beijing Olympics and making them successful. Q15 Mr Hamilton: Secretary of State, can I move us to another part of the world, to Saudi Arabia. Since 2003 this Committee has received quite a number of allegations concerning corruption in arms sales to that country. Some of those allegations go back to the 1970s, as I am sure you will be aware. Every time we put those allegations to the Ministry of Defence they have been refuted, but for the record, as this is the first time you have given evidence to the Quadripartite Committee, can I ask what your response is to the allegations that since the 1970s British civil servants have been aware of, connived at and have facilitated defence exports tainted with corruption to Saudi Arabia. Des Browne: If I may be very precise, given that you are giving me the opportunity to do this orally for the first time, as our memoranda of 2006 and 2007 said, the position regarding allegations of bribery remain the same as was set out in 2003 and that is that they are totally unfounded. Q16 Mr Hamilton: Thank you for that very clear statement. As you know legislation has been introduced over the years which has made it completely illegal for any corrupt practices to take place and for some sort of extraterritoriality. The allegations that have been made to this Committee took place over 30 years and the Government has actually defended all those allegations going way back to the 1960s. The responses have not relied upon Part 12 of the Anti-Terrorism, Crime and Security Act 2001. That statute provided extraterritorial reach, as I have said, in respect of acts of bribery by UK citizens overseas but the MoD said that for many years prior to the introduction of the 2001 Act UK civil servants were already subject to extraterritorial jurisdiction for criminal offences if all the elements of the offence were committed overseas by virtue of the Criminal Justice Act of 1948. The implications that we drew were that if a civil servant was engaged in corruption overseas he or she would have been prosecuted under the 1948 Act. Is that a correct construction to put on the MoD's position? Des Browne: I am grateful to the Chair in particular and The Daily Telegraph for giving me notice of these questions since about October of last year and, given that I have had some notice of this line of questioning which has been promised to me for some six months now or thereabouts, I have done a fair amount of enquiry into this. I will endeavour to help the Committee as much as I can within certain constraints. My understanding, from the enquiries that I have made and the advice I have received, is that Section 31 of the Criminal Justice Act 1948 creates just that jurisdiction. So far as public officials were concerned in terms of activity abroad we did not need to wait until 2001 until there was a jurisdiction including activities beyond the shores of the United Kingdom. The answer to your question is that for a prosecution there needs to be a complaint, evidence and an investigation. I am not aware of any complaint and investigation that took place in relation to the 1948 Act so if you draw the inference that the absence of a prosecution meant that there was no breach of it, then you are entitled to do that. I am not suggesting that to you. I do not know if, at any time between the 1970s and now, somebody made a complaint. I don't know. Can I also say to you, just for completeness' sake, that my understanding-and I accept this advice-is in law that this extraterritoriality, this jurisdiction went beyond the public servants and in fact there was in the common law such a jurisdiction relating to people who were not public servants. If that is any help, that is what I understand the position to be. Q17 Mr Hamilton: That is very helpful. From what you said earlier one might assume that if no-one has been prosecuted then there has been no evidence of corruption, or none that you knew of, no accusations that you knew of. Des Browne: That is what I took from the nature of your question. That may well be an entirely appropriate inference to draw but I am not asking you to draw it. If the Committee chooses to draw it then that is a matter for them. Part of the problem in this area of questioning is of course that my state of knowledge is going to be impeded by the limited degree of knowledge that I can have of things that happened 30 years ago. Q18 Mr Hamilton: I quite understand that. However, can I just put to you that an alternative explanation to the fact that there has been no prosecution because there has been no evidence is that no-one has actually been looking for that evidence of corruption or indeed that no-one within the MoD was interested in mounting a prosecution under the 1948 Act. What would you have to say to that? Des Browne: My answer to that would be, given the documentation which I think we are about to come and look at that and the fact that my attention has been drawn to it, is that that documentation supports an interpretation that in fact the officials who are being sometimes maligned I think inappropriately were in fact making sure that there was not a breach of the 1948 Act or indeed a contravention of the 1976 Directive. They were actually acting overtly in a very honest, straightforward and non-corrupt way. Q19 Chairman: Secretary of State, I would like to come onto 1976, but before I do that, as you will know on 16 June 2006 the former Defence Secretary, Lord Gilmour, in a previous administration on Newsnight specifically stated that Britain bribed senior Saudi officials to secure arms contracts. He said, "You either got the business and bribed or you did not bribe and did not get the business". Does this mean, therefore, that the former Secretary of State for Defence clearly had misunderstood how his department was operating? Des Browne: I do not think I am in a position to comment on the comments of other people since I have no knowledge of the factual basis that underpinned that. I can only answer questions from where I am, as the Secretary of State with responsibility for this area of policy now and some responsibilities in relation to contracts with Saudi Arabia and the state of my knowledge. I do not seek to draw any of these conclusions in relation to what former ministers may say. Indeed, people are open to have the views that they have quite clearly in this society and assume they are informed by their knowledge base. I am much more interested in the facts than I am the conclusions. Q20 Chairman: We appreciate exactly what you are saying but I am sure you will appreciate that we have some difficulty in the sense that the Ministry of Defence does speak of a period long before you became Secretary of State for Defence. In their memorandum to this Committee they are asserting that allegations of this kind are completely unfounded on the basis of the evidence they have and I simply make the observation that the public will find this difficult to comprehend given the statement of a previous Secretary of State for Defence and of others. Des Browne: I have many examples in my head of people who apparently had one view when they were in office and another view when they were out. I do not make any comment on that. What I say to you is that if you want my view then I am prepared to look at the evidence and the facts that are there and draw that view from that, not draw it from somebody else's conclusions based on their own experience of whatever it was because I cannot evaluate that unless I have their experience or they share the underlying facts with me and neither of them have. Q21 Chairman: I think that is entirely reasonable; I accept that. You invited me to ask you about 1976 so can we do so? You will be aware that papers that were in the National Archives in relation to certain events in 1976 have now come into the public domain, including a document that is before the Committee, the draft minute from Lester Suffield who was Head of Defence Sales at the time to Sir Frank Cooper, the then Permanent Secretary of the MoD. This draft says, for example, that agency fees, "although described as 'technical consultancy' amounts in practice to the exertion of influence to sway decisions in favour of the client". Then, in a further paragraph, he goes on to explain that senior Saudis "would certainly not officially approve the payment of fees although they undoubtedly expect appropriately discreet arrangements to be made. Statements to this effect are made by senior Saudis to visiting major businessmen in somewhat elliptical language whenever a suitable opportunity occurs" and then there is an example which I will not quote. There were two contracts under discussion in 1976 essentially and the papers deposited in the National Archives have now been published. Do you think this provides any prima facie evidence that possibly the rules were being breached? Des Browne: I said at the outset that I have given this some consideration and I have. Clearly I am limited by the fact that this document that had been deposited in the Archives and the Public Record Office and has come to light is 30 or more years old. There is no way in which I can determine the circumstances of this draft document. It is not clear from it-I have examined it-who the author of it is but it has a set of letters at the top which suggests who the final document was supposed to come from. I do not know what his status is or his authority; it is addressed to the then permanent under-secretary who is unfortunately now no longer with us and it is just not possible for me to construct a reliable picture of the situation 30 years ago. However, it is possible to take about a dozen words out of it, but it is also possible to read the whole document. The advantage I have had is the ability to be able to read the whole document. What does the document tell me? The actual document tells me that somebody was conscious of the principles of the use of public funds because it starts off with the sentence which says, "In the context of your" (meaning the permanent under secretary) "recent directive on the subject of agency fees", so it is written in the context of the 1976 Directive I assume which was in turn a set of guidelines for officials to ensure that they stayed within the law and did not act corruptly. The author of this document is consciously writing to the permanent under secretary to say, "Within the context of those guidelines and that objective" and then goes on, in my view, to set out an intention to alert the risk of allowing agency fees to rise above a particular percentage level, the inference that can be drawn if that happens or the danger that it will in fact be a corrupt thing to allow to happen. Then it goes on, "and advises the Government that the Government should seek to restrain payment so that that is not triggered". So the author says that there is a risk and that we should not trigger that risk. The way in which we should not trigger that risk is in the context of your analysis in the 1976 Directive and we should restrain these agency fees to a ceiling, which is broadly in the 1976 Directive considered to be a ceiling that is indicative of where the risk will not kick in, although the 1976 Directive also says you have to look at the individual circumstances of each one. Contrary to the conclusion that officials were in a recipe for corruption, they were actually conscious that they had to create a set of circumstances. The whole document does not seem to me to hold any other construction. It may well be that there are parts of it in which the drafter sets out certain types of behaviour-I have no idea on what basis that was being set out-but that is not the tenor of the document. The document says that in the context of your directive, permanent under secretary, of 1976 this is what we need to be alert to and this is what we need to do to make sure that we do not trigger that risk. It is capable of supporting, very easily, the entire contrary construction to that which people have put from 12 or 15 words out of it. Q22 Chairman: Except that it is confirmation that the Saudis undoubtedly expect appropriate discreet payment. Des Browne: What it does not do-and this is what the nub of the issue is-is that it does not say that we are going to countenance that or allow it; it says in fact that we need to behave in such a way that not only are we not going to do that but that it cannot be inferred that we are. Q23 Chairman: It is interesting that the 1976 Directive-the so-called Cooper Guidelines-does not actually make any reference whatever to the 1948 Act which has been used in aid of the MoD's position at the time, nor does it refer to any risk of criminal prosecution. Is that not a little strange? Des Browne: It may well be but I have no way of knowing whether it is or not. Does it not largely depend on the trained state of knowledge of those whom this directive was written for? If everybody in the 1970s who was operating at that level in the Civil Service knew very well that to act corruptly as a public official was a criminal offence then they probably did not need to be told. I actually suspect that most people who rise to that level in the Civil Service probably have an inkling that behaving corruptly as a public official in those days was a criminal offence whether they know the particular provision of the act or not. In any event, they have the advantage of the directive and the directive was obviously written to ensure that the MoD staff acted lawfully and properly. I have taken the trouble of drawing out of the directive the bits that I think support that. Rather than read the whole directive I can send it to you, but it says, "There is a need for special guidance because of the importance of maintaining strict standards in the defence sales field. Public money is not to be used illegally or for improper purposes. Officials must not engage in or encourage illegal or improper actions. This requirement covers relations with representatives of the UK firms as well as nationals of other countries. Defence sales are to avoid, so far as possible, the use of agents and if agents are employed"-and this is the important thing about the subsequent document-"they should be reputable in the area in which they are operating and a fee of 10% or more or any fee less than 10% which would appear excessive in relation to the level and work the agent undertakes is to be referred to the permanent under secretary." So it did not specifically refer to Section 31 of the Criminal Justice Act 1948 but it did pretty comprehensively set out the sort of behaviour which, if transgressed, would be a contravention of Section 31 of the 1948 Act. So it did the job although it did not refer to the actual piece of legislation. Q24 Chairman: What it also said was, "What is 'illegal' or 'improper' will depend in the last resort on the law and practice of the country concerned, and it is for the foreign government to determine what are acceptable standards within its jurisdiction." It then goes on to say-so that I cannot be accused of being too selective-"But where these standards are less restrictive than those applied within the UK, any relaxation of the UK standards should be applied by us with great caution". Somebody thought it was quite important to stress that what is 'illegal' or 'improper' depends on the country concerned and not upon the 1948 Act. Somebody thought it was important to say that and not that where the standards are less restrictive than in the UK we should apply UK standards but specifically the words chosen were: "any relaxation of the UK standards should be applied by us with great caution". I dare say, Secretary of State, you can apply different interpretations of the phrase "with great caution" but somebody here was sending a message that is not quite as firm, I would suggest, as the rule is according to the 1948 Act. Des Browne: Just to highlight the disadvantage that both of us have, we have a piece of paper in front of us, we do not know the author of that piece of paper, we have no way of looking into that person's mind. What we do know is that both of these objectives are served by this paper, the question is which of them was most likely to impress the reader? I have no way of knowing but I just say to you that as far as Section 31 of the 1948 Act, the makings of it were there even if the reference to the Act was not. Q25 Chairman: I want to ask a final question about the Panorama broadcast of 11 June last year. I have already referred to it in the context of what the late Lord Gilmour said but is it the case, as alleged in that programme, that MoD officials have processed quarterly invoices from Prince Bandar bin Sultan of Saudi Arabia? Des Browne: What is the case-and this is in the public domain-is the written answer that my predecessor Geoff Hoon, when he was the Secretary of State for Defence, gave to Mr Hancock on 20 June 2004 and that is (I read this short but people can read it for themselves) that claims are processed by MoD officials but those are claims that are endorsed by the UK Government for payment only when they comply with the terms and the prices contained in the associated contract supported by documentation confirming contractual performance and that what we do is that we process presentation for payments of claims submitted by BAE systems. That is what our officials have been doing. Can I just say, for the avoidance of any doubt, that in the context of the SFO[18] investigation, the officials from the MoD cooperated fully with the SFO in relation to their engagement in this process and shared all the information that was asked of them with the SFO investigation. There has been no attempt to try to do anything other than show that these allegations-which I still say are unfounded-against officials in the MoD are unfounded by transparency in terms of that investigation. Q26 Malcolm Bruce: Secretary of State, perhaps I can make it easy for you by asking what you are going to do now rather than what has happened in the last 30 years. The Government signed an Understanding Document with Saudi Arabia in 2005 and under that Document the Saudi Arabian Government announced on 17 September that agreement had been reached to purchase 72 Typhoon aircraft for the Saudi Armed Forces at a cost of £4.4 billion. This is a new contract starting. Transparency International-which I think you will acknowledge is a well-recognised body-has suggested that in order to make clear at the start of this arrangement that the accusations that have been discussed in the previous questions will not arise again, that it would be useful to set up a body comprising respected institutions from both countries that would monitor the finance, equipment and associated support areas during the whole life of the contract. The suggestion is that this has been set up by the two governments; my understanding is that they have in fact put this proposition directly to you and that it would be consistent with recognised standards of corporate integrity and that putting such an operation in place would both improve the image of the UK and of Saudi Arabia as to their intentions of how they are going to conduct contracts that go from this day forward to avoid the problems and the embarrassment we have suffered over the last 30 years. Des Browne: This contract which I think is very good for British industry and good for our broader security arrangements-the security of the United Kingdom and of the world-is an arrangement where the funding comes from the Saudi Arabian defence budget. Pedantically this process has not actually been put to us, it has been put to government, it was put to the FCO. The view of government is that these contractual arrangements are subject to the scrutiny of the NAO.[19] That is, in my view, a good enough and reputable enough organisation to be scrutinising them. Why create a new body to be arbiter of whether that body meets these criteria when we have a perfectly good body in the UK in audit terms which has a worldwide reputation and could scrutinise the conduct of this and will no doubt turn their attention to it at some time. The fundamental problem is that this is a government-to-government contract. The Saudi Government's view-and we respect this-is that the financial arrangements in relation to such contracting is confidential, so I do not understand how creating some other body is going to actually address the issue that people will look to in any event to criticise by inference or allegation what is going on. I am confident enough that the NAO can do this job personally as a minister; I am confident that they do not avoid tough scrutiny of the Government-that is not my experience of them-and I do not see any advantage in setting up some body where in any event there is no international standard to set it against. Q27 Malcolm Bruce: Just to make clear, Transparency International say they have written to the prime minister, the former Secretary of State for Trade and Industry, the Secretary of State for Defence and the Head of the FCO Middle East desk commending their proposals. Their proposals say that it is the governments that should set them up so it is a government-to-government arrangement. If you are saying-as I think you are-that you are not really interested in pursuing that proposal or any variation on it, other than what you have said how can you say with certainty that you can be confident that this new Al Salam contract will not be tainted with accusations of bribery as has been the case with previous contracts? Des Browne: I cannot be certain that people will not make allegations and accuse anybody; I am saying that this is a perfectly proper contract in which there is no impropriety associated with this negotiation at all. It is a government-to-government contract. I apologise both to you and to Transparency International that I was misinformed about whether they had written to us or not; they may well have written to my office. However, that is neither here nor there, they wrote to government in any event. I have to say that in this area I suspect that were we to accede to this and that the two governments were to set this up, the next claim would be that it is not independent because the governments set it up even if it was in response to a suggestion from Transparency International. There is a perfectly good, independent body in the NAO that reports to Parliament that does this job, why do we need another one? Q28 Malcolm Bruce: There was a perfectly good Serious Fraud Office that did not quite deliver the job on the previous accusations. Des Browne: I have to say that I fundamentally disagree that officials behaved corruptly. Q29 Linda Gilroy: Secretary of State, you announced the outcome of the review of defence attachés last September. To what extent did you take account of the need to have suitably qualified staff such as defence attachés to advise on defence exports and to monitor the use to which British arms imports are put? Did you take account of this role when you were making the decisions to either remove or reduce the numbers in the different embassies? Des Browne: We looked across a whole host of defence attachés across the world and we re-evaluated their roles in the context of the 21st century. We looked at the job they were doing and saw how we could best maximise our resource and where we could make efficiencies. That is what you will expect of government. The principal role of the defence attaché in the 21st century is to help strengthen international peace and stability by working to prevent conflicts, to help boost peace support operations and to reduce the risks of terrorism. That is why we deploy them. Can I also say that the assessment that we made was that of the total defence attaché time; about 5% of it was associated with any aspect of defence exports. The principal responsibility in relation to licensing issues does not lie with the defence attaché, it lies with the Foreign Office. Because of the expertise of our people periodically we are asked to help in this regard as part of the team. They will still be able to do that. We have no doubt that they will be able to meet the high standards that we have been able to meet as a team in these missions abroad when work is necessary to be done. The defence attaché was a part of that but not the majority part of that process that people believed they were. In some countries they did more of it than in others, but it was about 5% of the total time of defence attachés. Q30 Linda Gilroy: Part of the statement said that as well as reductions in military staff more of their tasks will be undertaken by civilian personnel. Can you assure us that these changes will not degrade the ability of the embassy posts to advise on applications? How does that figure in with your 5% of time? Des Browne: I cannot divide it between military and civilian. Tony may be able to help us in that regard; he is more associated with the day-to-day working of the Defence Export Service. In all its manifestations, both military and civilian, you do not have to be a military person to be able to do this. Of course we will, as we reduce military force and replace it with civilians, take into account the need for certain skills and for trained people. I can reassure the Committee that there will be no reduction in the level of scrutiny that is necessary from posts abroad in relation to the licensing process by the process that we have gone through with defence attachés. It was not the majority of the work that we did that some people believed that it was. In actual fact the defence attachés, people will be pleased to hear, are more focussed on trying to prevent conflict, keeping the peace and counter terrorism work. Q31 Sir John Stanley: Secretary of State, the joint funding arrangement between the FCO and the MoD goes back a long way and, to the best of my recollection, it was in place when I was minister for the Armed Forces. Is it not the case that in reality the defence attachés still perform responsibilities which come within the MoD but equally-and your answer confirms this-they discharge functions which come within the responsibilities of the FCO? Given that that remains the case, was it not wholly unreasonable-I cannot put it any other way-for the Foreign Office to unilaterally renege on their joint funding arrangement and basically say, "You, MoD, are left with picking up their slice of the bill"? Des Browne: I spent a lot of my time across government encouraging people to do things across government and to work together across departments. That requires, I think, the ability to be able to respect the priorities and the changing priorities of government departments in a pretty flexible way. We ask people across government who work with us to respond to changes that we make. I do not think it is unreasonable. I fully understand why that £10 million to £11 million became a hostage to other priorities in this complex and changing world and I was pleased to be able to work with them to re-shape our defence attaché team in a way that I think will ensure that we still do all the priority work that we need to do as well as we have ever done before and we have been able release resources towards other priorities. That, as you know from your own experience, is what government is all about. Q32 Mr Borrow: I want to touch on the UK/US Defence Trade Cooperation Treaty. The Committee has received evidence from Saferworld expressing some concerns about the impact on arms exports and particularly suggesting that the Treaty puts the UK/US relationship into some imbalance in the sense that it allows the US to determine which goods are included in the Treaty and allows the US to override the UK arms exports controls and impose their own in terms of end use of particular goods. Would you like to comment on that? Des Browne: It's easier to answer the last part of the question first. The integrity of our own arms export control system is entirely intact and the United States has no role to play in that; it is still our responsibility. It no way weakens it and no way affects it. It is a misunderstanding of the Treaty if people think that it does. The other part of the question is designed to identify that there are some sensitive technologies (which is a phrase that is used in the Treaty) which will be excluded from the Treaty. The fact that the Americans will identify certain technologies that they will exclude from the Treaty and they will do that in consultation with us in the implementation arrangements does not in my view in any way undermine or imbalance the Treaty. In fact the whole purpose of the Treaty is to bring the processes into alignment so that we can speed up and simplify the delivery of equipment to the UK but also to US troops who operate together around the world which is a longstanding policy of both countries. Since we have deployed together and operated together and are valued allies of each other that seems to me to be an appropriate and reasonable objective and it is in our interests as well as in theirs. In relation to the sensitive technologies, there will be about three or four of them. I am not able to specify what they will be but they will be a comparatively small number. I think given the advantages there will be in the treaty which will be manifest-and I am sure you know what they are-then this comparatively small area of restriction which is perfectly understandable because of the sensitivities of the technologies does not in any way undermine it. Q33 Mr Borrow: In terms of the implementing arrangements, where are we up to with that? Where is the UK in terms of exchanging notes with the US Government and also in terms of Senate ratification of the Treaty itself? Des Browne: The current position in relation to the Treaty, as the Committee will know, is that the Treaty has gone through the parliamentary process here. The congressional process is an integrated process in the sense that both the Treaty and the implementing arrangements will be presented to Congress. The negotiation of the implementing arrangements is going on at the moment. I have in my mind a kind of timeline in relation to that but I do not think it would necessarily be helpful to the negotiations for me to publicly say that we expect them to be concluded on a particular day. However, they are advanced, they are going well; we have no reason to believe that they will not be concluded successfully in a reasonable timeline and then we will be in a position to present the Treaty to Congress. We hope to be able to do that at an early date and we are working with the American authorities to be able to do that. In case you ask me when I think we will get it through congress, I do not necessarily think it would be helpful to that process for me to say from here and feed into that process; I think we need to leave it to them. Q34 Mr Borrow: A significant chunk of the UK defence industry is international in the sense that it is owned by several European countries' major companies that have invested to a large extent in the UK defence industry in the last five or 10 years. How do they fit into this particular Treaty? Des Browne: You know the value of the Approved Community to this Treaty; the so-called List X is the Approved Community. We already have to take into account the fact that companies are owned by foreign owners when assessing applications to join that community of companies. Nothing substantially will change; we will still go through that same process and take that into account in relation to the Approved Community for the Treaty and it will not make that much of a difference. Q35 Peter Luff: Secretary of State, the Defence Export Services Organisation is still with you until the first of April when defence sales moves to the UKTI. What was this all about? Was it doing its job too well as the NGOs[20] seemed to think? Or perhaps not well enough? Or is just change for change's sake? Des Browne: People make changes in the machinery of government regularly and they are a matter for the Government. I have no knowledge of machinery of government changes being extensively debated, discussed and consulted about before they were announced in the past and this was no different. We promised that we would work through before Christmas with industry and with other stakeholders the nature and shape of this change and I am pleased that on 11 December when my colleague, the secretary of state for DBERR, announced the nature and shape of the future arrangements they were welcomed by industry and so they should be because we now have, I think, an ability which we were seeking to create of using the broader UKTI framework to support and help the defence exports area and this will improve the one organisation which was doing well and the other and they will come together and do better. Q36 Peter Luff: So your hope is that it will increase defence sales. Des Browne: Defence sales are a very complex area, as you know. Our ambition to maintain a level of them for a number of reasons is very important. They make a big contribution to building capability where we need to build it for the purposes of peace keeping and other purposes that we share in terms of our foreign policy. The measure of improvement in this area is not just about the numbers. We happen to have had last year a very good year. We had a very good year a few years ago. We believe that we will continue in that way. Against all the objectives that we set for the defence industry I think that this change will be good. Q37 Peter Luff: The NGOs have welcomed the change because they think it will put defence sales and defence exports on a level playing field with the rest of industry which presumably means will disadvantage defence sales. Is that the case? Des Browne: I think that everybody at the end of the day will see that this change was to the advantage. Q38 Peter Luff: Advantage of? Des Browne: The advantage of the objectives that they set. Q39 Peter Luff: This is getting rather circular. Des Browne: No, it is not. This is not a zero sum game. It is not the case that in defence, in defence sales and in defence equipment you always have to fly in the face of the NGOs and their ambitions by what you do in the defence industry. The trick is actually to do the two. What I am saying is that it is not a zero sum game and there is no reason to believe that people will not see that the issues that they are interested in about transparency, about ethical behaviour and all the rest of it being improved. I am not suggesting that our defence industry does not conform to these. It will be improved by this but at the same time we will have the advantage that the very successful organisations such as UKTI will be able to deploy its extensive resources in support of the defence industry. The defence industry and the sales of certain equipment abroad is a humanitarian thing to do in many circumstances. Q40 Peter Luff: I share your admiration of UKTI; I think it is an organisation that has got its act together with extensive consultation with industry on its new strategy. Why was there no consultation of the defence industry about this new strategy? Des Browne: We discussed extensively the implementation of this policy objective with the defence industry to the extent that when the arrangements were announced the industry welcomed it. The fact that NGOs have seen that there is a renewed commitment to the highest business standards which we wish to seek to apply across this industry is a good thing. Q41 Peter Luff: Will you publish those discussions in some form? Des Browne: I do not know whether it would be possible to meet the commitment to publish the discussions because I suspect a lot of them took place in different formats. Q42 Peter Luff: Will you reflect on it? Des Browne: I will reflect on the request but I am not conscious, to be absolutely honest, that the people who were involved in those discussions were asked to keep them confidential. In fact, as I recollect, we talked about them quite freely in the public domain. Q43 Peter Luff: What difference will the defence exporters notice? Digby Jones-Lord Jones of Birmingham-becomes our leading defence arms sales spokesman; that will be quite a big change I expect. Apart from that what difference will the exporters notice? Des Browne: What they will see is an integration into the Government's more general trade support activities while at the same time building on the success of DESO and still allowing the best of the specifics of DESO that were related to defence to be preserved such as, for example, the support that my department gives them. We will still put significant resources into that; it is entirely appropriate that we should be able to tell governments abroad who may wish to buy a particular capability through the mouths of our military people exactly how it can be used and how it can advance the ambitions that we have about deployable capability et cetera. They will see themselves in a bigger and more integrated organisation and they will have the advantage of the more extensive networks of that organisation in support. It may well be that Mr Pawson may be able to add to that because he has been in charge of this. Q44 Peter Luff: Where will he be after the first of April? Mr Pawson: There is going to be some form of open competition some time for the head of the new organisation. I think I want to make two points. As the Secretary of State has made clear, there is continued commitment by MoD to the support of defence exports which was an initial point of concern for the industry. That having been given, this is actually a very constructive, progressive development in two quite separate areas. Firstly, in terms of transparency, the very first question you asked Chairman was about the separation of promotion and licensing within the Ministry of Defence. This, of course, does make that separation much clearer and, rightly or wrongly, there is a misperception or concern about it. Working on the inside, that is a wrong perception but the perception is there. So it would help there. Secondly, inside the Ministry of Defence there has sometimes been a blurring between whether we are doing this for economic reasons, to support an industry, high-tech, good for the country and good for jobs et cetera, or are we doing this for defence reasons? In the future we are going to have a service level agreement between the UKTI and the Ministry of Defence; that is going to be published so there is greater transparency and greater clarity there. One aspect of this is that some commentators have been asking for this greater transparency and greater clarity; this will provide it. In terms of support for industry, UKTI has a very extensive overseas network, for example. There are over 1300 people in UKTI overseas; DESO is in less than 20 countries. So there will be access to this network. DESO does not have any money to give industry; UKTI does under the industrial policies. Access to UKTI services in the broad sense will be easier for the defence industry. That is particularly true of companies who are new to exporting and are new to the market SMEs.[21] The defence industry itself is changing; it is not concentrating solely on defence in the way that it once did so that, for example, it is moving into border security, homeland security if you like. That is why the new group in UKTI is going to be the Defence and Security group. There are number of advantages both in terms of the transparency and accountability and in terms of developments in industry being reflected in the way in which the Government is supporting it. Q45 Peter Luff: You are actually not transferring DESO, you are splitting it up. That is not a criticism, it is an observation. It seems from the Prime Minister's statement that government-to-government defence sales, including the current arrangements with Saudi Arabia, will remain within the MoD. What is the reason for the MoD retaining responsibility for these contracts? How long will that process go on for? Is it future government-to-government contracts too? It is a big slice of DESO's activities. Do you understand the concern that some people have that they see it as possibly being used as some kind of cloak for sensitive and controversial deals within MoD rather than moving into UKTI? Mr Pawson: I was using shorthand in relation to DESO for the export promotion part of DESO. There is the export licensing part which is staying behind, hence the clarity I mentioned earlier. There are the government-to-government arrangements, including between Saudi Arabia and the British Government which remain with the Ministry of Defence, which in turn have detailed back-to-back contracts from the Ministry of Defence to defence suppliers and only the Ministry of Defence can operate those contracts. Future ones are going to be considered on a case-by-case basis but there are not any anticipated in the near future. Q46 Mr Bailey: The theme of NGOs, UKTI, MoD and due diligence. It has been put by Transparency International that this change does give the opportunity to improve safeguards to ensure that the tax payer is not underwriting corruption abroad and to improve methods of due diligence. What is your view of that? Des Browne: We do not underwrite corruption abroad in any event but, as I say, if people see this as a commitment to the highest business standards then I welcome that because that is what we have. If they see it as assisting the defence industry to become more transparent and, in their perception, accountable demonstrably and supporting good governance then I welcome that because that is our objective and I believe that is the industry's objective. Certainly when I meet the leaders of industry those are the conversations that I have with them, among others. It allows us to set out some form of common code of good business practice which will help that process along the route and I welcome that as well. There are advantages. They are not advantages that could only have been achieved by this change but if you can get all of the other advantages that Tony sets out with that then that is good. I am determined to try to prove in my contribution to this area of policy that this does not need to be a zero sum game. Q47 Mr Bailey: Will those improvements include the publication of names of intermediaries and advisors? Des Browne: There are a number of issues which need to be addressed. Since I no longer have direct responsibility for these issues-or will not have from the first of April-I would much prefer that it should be the secretary of state for DBERR in his negotiations and discussions who takes these issues forward. Q48 Linda Gilroy: On the EU single market some estimates have suggested that there is as much as three billion pounds per year in administrative and legal charges.[22] What is the MoD view of the creation of a single market to try to overcome the waste in some of that? Is the logic of any changes in that direction a reduction in the licensing for armed transfers between European States? What are the implications for the UK strategic export control system? Des Browne: I had not heard those figures before; it may well be that Tony might want to comment on them. It seems to me to be grossly exaggerated but I suspect the source is a particular view of Europe. Q49 Linda Gilroy: It is the Chairman of the European Parliament Sub-Committee on Security and Defence Estimates. Des Browne: I had not heard those figures before. I would need to go and consider them but they do seem to be quite extraordinarily large. There is work going on in this intra-community transfer directive which is the legislative route for the work that is being done to change the way in which intra-community transfers of defence related items takes place. There is a document published and we are considering our position in relation to this document that has come out and there will be further discussions with the council working group but by and large our view is that this area of work addresses an objective that we have which is that our licensing practices in our view were ahead of most other Member States and we are trying to get them to bring their licensing practices to where we believe ours are. That manifestly would be in our interests. Q50 Linda Gilroy: So you think it is possible to get a win-win situation. Des Browne: Obviously we have to be very careful here. As I recollect-although I do not remember the detail-we did not agree with the early proposals. We argued for a set of proposals which were much more akin to the scheme that we have in this country. Those proposals have broadly been accepted, which we are pleased about. They are reflected in the current document which is out for consideration by other countries, including some who supported the earlier proposals. So this is a dynamic process. Insofar as the actual documentation, it shows that we have been persuasive in our arguments; we have won a lot of the arguments and we are pleased about that. Broadly we welcome the direction of this but we are alert to the possibility that it could slip back at any time and we will make sure that we try to prevent that from happening. Q51 Chairman: Thank you. It is four o'clock and we did aim to finish at four o'clock. May I thank you and your officials for your written evidence and also for coming along this afternoon; it has been very informative and very helpful and we look forward to seeing you again. If you have any other suggestions or questions we can put to the Secretary of State for DBERR please put them in an envelope in my pigeon hole; that would be very much appreciated. Des Browne: Thank you very much. I thought this was a once in a generation appearance. Chairman: We hope not. Thank you very much again. [1] Department for International Development [2] Department of Trade and Industry [3] Department for Business, Enterprise and Regulatory Reform [4] Defence Intelligence Staff [5] Weapons of Mass Destruction [6] Defence Science and Technology Laboratory [7] Communications Electronics Security Group [8] Note by witness: All criteria are applied during the F680 process, although the principle MOD concern at this early stage is the release of classified information to potential customers. [9] UK Trade and Investment [10] The Defence Export Services Organisation [11] Note by witness: Those cluster munitions that the Government withdrew from service last year are in the process of being destroyed. This will take several years to accomplish. [12] UN Convention on Conventional Weapons [13] Note by witness: See footnote 11. [14] Note by witness: The failure rate of the weapon is 2%-this is on public record. [15] Note by witness: See footnote 14. [16] Note by witness: The deployment of specific weapons depends on the nature of the military mission and the operational environment. Currently, cluster munitions are not deployed by UK forces in Iraq or Afghanistan [17] Defence Systems and Equipment International [18] Serious Fraud Office [19] National Audit Office [20] Non-governmental organisations [21] Small and medium size enterprises [22] Note by Member: Recte euros. |